China ease again with both rates and banks reserve ratio

A just reported 6.9% is higher then forecast of 6.8%.  However is under overall yearly target of 7%.  China decisively cut its rate again for both benchmark interest rate and bank reserve ratio. 

It isn’t a bad news but we advise to closely monitor the signal of show hand.  We believe still another 2 to 3 years ahead.  If US is not able to raise its rate with China continue to weaken and it’s internal demand fail to stimulate the grow rate. A sizable recession may really come globally. 

In short term, KLCI will be stimulated further with this news as China is Malaysia largest trade partner now.

Budget 2016 as expected a mild all-rounder but without an edge

As expected by us that budget 2016 will need a big areas to cover as all rounder.  However it is not really a stimulus but  emphasise on lower budget deficit to stable RM. 

Reducing GST for some necessities is crucial.  Taxing the rich to increase budget revenue.  Using GST to cover oil price budgeted in 2015.  CAPEX to kick start numerous infrastructure projects.   Mildly reduce taxes for middle class and promote necessary industries via tax rebates.

GDP expected to be lowed around 4% is reasonable. Minimum wages increased also can assist mildly to the lower income group.

There are many details but we believe is an all rounder budget that specifically aim to stable RM.  I believe a little budget increase in deficit is a better option to boost economy. Boosting tourism market is the right move but again always is the delivery. We need to catch up in this segment.

As we expected the new budget will clear the concern of income from oil per barrel based on USD 100.  We expect RM will slowly recover with even more intervention from both fiscal and monetary policies ahead.

We look forward KLCI to retest 1800 before year end. 

We added Bingo at HKD 0.265

We continue to add Bingo.HK at HKD 0.265 in anticipation of its movie release in CNY 2016.  The potential of company is huge but need a solid team to assist Stephen to push the group to a higher heights.  Our target is HKD 0.50 in mid term till 1st quarter of 2016.

An all rounder budget needed to safe BN

Falling RM, slowing main street, weakening export demand by China, Europe and US.

Excitement needed for rural population to continue support BN.  Sarawak and Sabah sweeteners and falling stock market.  Stagnant property market. Of course foreign fund managers and credit rating agencies demands.

This will be a very tough budget that need to cheer everyone.  We think will be very much in focus to have a slightly over temp budget deficit of 3.5 to 4%.  Nothing can get worst unless BN going for own suicide.

The city folks or middle higher income group may be the only target for less subsidies or more collection.

We believe the market will response positively to the budget towards year end.

Buy on dip for all major bluechips

As such we believe the market will gradually recover towards end of the years.  All bluechips can see an average of 10 to 20% capital gain in next 3 to 6 months.  Unless a drastic event occur and we believe the chances of our expectation is likely to happen.

Ringgit is undervalued as to oil

We believe the fair value of RM is minimum below RM 3.80 vs USD 1.00.  The current speculation of USD rate increase has pushed dollar to the high side.  Overall the fundamental economy in US has not changed too drastic in the past years.

Local front even though we do have 1MDB issue and high house hold plus national debt.  Savings, natural resources and private sectors are still strong enough to weather any crisis. 

Oil will recover and the fair value should be above USD 60 per barrel.  I don’t know when but be ready for another while ride up swing in short to mid term.

Especially after October budget announcements when the new budget will base on a much reality oil price.  However in long run that’s not healthy and our economy must not be too rely on oil alone. 

Bingo 8220.HK likely above HKD 0.45 in Q1 2016

A new movie “Little Mermaid” is confirmed to be on Cinema around Chinese New Year of 2016.  We do not know the result of this film.  But we believe can be easily a speculative play on Bingo.  Current HKD below 0.300 is still a good price to accumulate.  We will add more if the price in between HKD 0.26 – 0.28. 

Disposed some Axiata-C4 and UZMA

We have disposed some Axiata-C4 at average RM 0.165.  We are delighted with more than 200% net gain in 2 weeks.

We also sold some of UZMA at RM 2.34.  As we like our profit for more than 30%.

We bought back ECSICT at RM 1.43 and ALSREIT at RM 0.995.

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